Plain English Or Not - It's Still A War

One little-known benefit for the public in Obamacare has nothing to do with treatment or medication. In plain English, it’s plain English.

Thanks to the policyholder’s friend, Wendell Potter, who used to work for an insurance company, we now know that it’s the law that insurance policies will have to be written in words that the average person can understand.

Whoa! You mean somebody buying a policy doesn’t have to rely on the insurance company’s statements anymore? An ordinary person can read for him or herself and understand what he or she is buying? What a breakthrough!

Not only will you understand what the insurance company is required to do for you, you will also have a very good idea what monies you will be required to pay for various medical and hospital services. Just as importantly, insurance companies will have to deliver these plain English summaries in a standard format. This will make it easier for those needing insurance to compare the benefits of competing companies.

During earlier hearings before the U.S. Senate on the Affordable Care Act, Professor Karen Pollitz of Georgetown University testified that the average American reads at an 8th grade level but that insurance policies are generally written at a first year college level. It’s no wonder we find in our disability income insurance practice that very few policyholders even try to read their policy until they become disabled. Unfortunately, by then, it may be too late for them.

The standard format summary to be provided by the insurer requires an estimate of the respective costs to the policyholder and insurance company of delivering a baby or treating a disease such as diabetes. This feature also makes it simpler for those seeking policies to evaluate the offerings of various companies so as to choose the best deal.

This year (2013) the estimate of cost will be based on a “best estimate” formula provided by the government since there is no history. After this year, the estimates in the summary will have to be based on the actual experience of the individual insurance company based upon its actual claim experience.

And, if any of our readers are feeling sorry for insurance attorneys because Obamacare will make it easier for claimants to understand their rights – DON’T!

Insurance companies, based on their history, will enhance their old ways and find new ways to try to duck their benefit obligations. With the complexity of disability insurance law and insurers’ ability to frustrate claimants who are fighting not only an illness or injury, but also complete lack of income, there should be plenty of work for claimant’s attorneys.

The policy language may become friendlier under Obamacare, but collecting benefits from an insurance company will be as tough or tougher than ever.



Back To Basics

Sometimes getting back to basics is the most helpful way to keep people informed about their disability income insurance coverage. One of the most basic of the basics is to read and understand your disability income insurance policy. It has always distressed us to find that many, many people don’t read their policy - the contract under which they will present a claim for benefits.

The first basic is what type of disability income insurance you have. Is it a group policy covered by ERISA or is it an individual policy?

Many policyholders are not certain of the difference the answer to this question makes in terms of coverage and requirements for proving a claim of disability.

An ERISA policy purchased by an employer for employees is not nearly the same as a policy bought by an individual. The ERISA policy is somewhat of a mystery to the employee because usually no policy is delivered to the individual. The employer has the policy and may give the employee only a Summary Plan Description (“SPD”) of what is in it.

Anyone familiar with insurance companies and policies knows a summary does little good when a claim is contested and the insurance company looks into every nook and cranny of the policy language to find a reason not to pay.

So, if you are covered by an ERISA policy it would be most wise for you to take a good look at it before a disability arises so that you know what protection you have or don’t have and can prepare yourself before a sickness or injury strikes. Ask your boss or your Human Resources Director for a copy so you can read and understand the ERISA policy yourself.

But because a disability income policy may be privately purchased and not subject to ERISA doesn’t mean that it doesn’t remain a mystery. If a policyholder doesn’t read and understand the terms of the policy, the individual doesn’t really know what protection is afforded and is, therefore, as much in the dark as an uninformed ERISA policyholder.

Relying on an insurance agent’s or an insurance company ad’s description of what protection is in the policy is never a good idea. It is a particularly bad idea when a disability income policy is involved because of the complications of exactly what is covered, how it is covered, for how long it is covered, and the difficulty of the hoops the policyholder will have to go through to get benefits.

In both ERISA and individual policies, once you know what you have, you are able to decide if that coverage is what you want for yourself and your family. If it is – fine. If it is not, then you may seek to change your individual policy or buy additional individual coverage to add to an ERISA or private policy to bring your coverage up to your standard.

Either way, once you understand your policy, you will be certain of what protection you have before disaster strikes and it is too late to do anything about it.

We know all too well that insurance policies are boring to read and difficult to understand. But, don’t be lazy. Don’t be intimidated. Take your time. You can do it!

But, if you do all of the above and you still have questions, get the answers you need now while you can still do something about any changes you might want to make for the sake of yourself and your family.